DPRD JABAR

Titimangsa

Tuesday, 16 June 2015

According to the article, China is
recasting all of their gold reserves into small one kilo bars in order
to issue a new “gold-backed” currency. Many say this will disrupt global
trade and will eventually cause a collapse of the US dollar.

There can be no doubt that the US dollar
will soon be history. China is recasting all of their gold reserves into
small one kilo bars in order to issue a new ‘gold backed’ global
currency. This is surely a strategic part of their recent push to sign
new trade agreements with Russia, Japan, Chile, Brazil, India, and Iran.
The cat is now out of the bag, the US will be given the ‘bums rush’ by
the largest trading nations in the world and the dollar will go down in
flames. GATA now estimates that 80% of the gold that investors believe
they have in allocated accounts is long gone, the majority of it
probably wound up in China.

Here is an excerpt from Jim Willie’s ‘Hat Trick Letter’

Jims recent article starts out with…

Many are the events, signals, and
telltale clues of a real live actual systemic failure in progress. Until
the last several months, such banter was dismissed by the soldiers in
the financial arena. But lately, they cannot dismiss the onslaught of
evidence, a veritable plethora of ugly symptoms of conditions gone
terribly wrong and solutions at best gone awry and at worst never
intended in the first place.

CHINA RECASTS GOLD BARS

China is well along an ambitious plan to
recast large gold bars into smaller 1-kg bars on a massive scale. A
major event is brewing that will disrupt global trade and assuredly the
global banking system. The big gold recast project points to the Chinese
preparing for a new system of trade settlement. In the process they
must be constructing a foundation for a possible new monetary system
based in gold that supports the trade payments. Initally used for trade,
it will later be used in banking. The USTBond will be shucked aside.
Regard the Chinese project as preliminary to a collapse in the
debt-based USDollar system. The Chinese are removing thousands of metric
tons of gold bars from London, New York, and Switzerland. They are
recasting the bars, no longer to bear weights in ounces, but rather
kilograms. The larger Good Delivery bars are being reduced into 1-kg
bars and stored in China. It is not clear whether the recast project is
being done entirely in China, as some indication has come that Swiss
foundries might be involved, since they have so much experience and
capacity.

The story of recasting in London is
confirmed by my best source. It seems patently clear that the Chinese
are preparing for a new system for trade settlement system, to coincide
with a new banking reserve system. They might make a sizeable portion of
the new 1-kg bars available for retail investors and wealthy
individuals in China. They will discard the toxic USTreasury Bond basis
for banking. Two messages are unmistakable. A grand flipped bird (aka
FU) is being given to the Western and British system of pounds and
ounces and other queer ton measures. But perhaps something bigger is
involved. Maybe a formal investigation of tungsten laced bars is being
conducted in hidden manner. In early 2010, the issue of tungsten salted
bars became a big story, obviously kept hush hush. The trails emanated
from Fort Knox, as in pilferage of its inventory. The pathways extended
through Panama in other routes known to the contraband crowd, that
perverse trade of white powder known on the street as Horse & Blow,
or Boy & Girl.

The World's Next Gold Standard Will Come Through China And Africa, Not America

see Images name (Photo credit: Wikipedia)

The thoughtful piece, “China Should Issue Gold Bullion Coins That Aren’t As Practical In The U.S.” by
Nathan Lewis allows me an opportunity to re-visit my growing conviction
that the world’s next great episode in currency stability will come through the symbiotic relationship that exists between China and Africa, rather than from the United States of America.
There are a few reasons for this.

First, the China-Africa engagement has reached a plateau in its second phase which centered around infrastructure-for-oil arrangements. Chinese investment in Africa’s physical
capital is increasingly frowned upon and in order to successfully
navigate a growing horizon of dissatisfaction in African nations where
electorates feel exploited, the Chinese diplomatic onslaught and African
leadership will have to find a new point of engagement – human capital.
It appears that both sides are getting closer to recognizing the
estimated $700 billion gap in the financing of African Small and Medium
sized enterprises (SMEs) as the way to go.

In a Forbes column last year I presented a path by which China could facilitate the usage of its currency, the yuan, throughout Africa .
The formula combined top-down incentives such as providing seigniorage
to African governments with bottom-up steps like making yuan-denominated
loans to entrepreneurs and SMEs. Something related to the latter
emerged in Tanzania in August with the National Bank of Commerce
(jointly owned by Barclays, the International Finance Corporation, and
the Government of Tanzania) enabling its banking customers to do
business with Chinese partners directly in yuan, avoiding intermediate
transactions in other currencies. The bank proudly places the announcement front and center on its website, “Speaking
during the launch, NBC’s Head of Treasury, Pius Tibazarwa said, ‘We
have decided to launch the Chinese Currency offering, after realizing
the need for this offering, owing to the growing business between
Tanzania and China. We believe that this offering will ease the way our
customers do business with their partners in China and vice versa.’”

Next door, Kenya is now determined to provide Africa’ first yuan clearing house which would allow the renminbi currency, of which yuan is the unit, to be utilized as a settlement currency.
With China as the only rational economic actor on the continent with
deep and patient enough pockets for risk finance and Africa as the
world’s largest laboratory of unbacked talent, and desperate to address
its volatile population pyramids, the marriage is obvious. And once the
Federal Reserve finally tapers its quantitative easing, the largest
African economies like Nigeria, now dependent upon hot money flows (but
who already want to hold 10% of their foreign exchange in renminbi) will
increasingly be incentivized to turn East.

And that raises another issue – why a national gold standard is less likely in the United States.
Nathan Lewis notes, “Despite promising moves on the state level, such
as Texas’ recent move to remove taxes and endorse the use of gold and
silver as money, the U.S. Federal government will probably remain
opposed to any viable alternative to the now-dominant fiat dollar.”
And there is another barrier – the partisan divide.

The Federal Reserve remains the greatest impediment to currency
stability and it can only be effectively opposed by a Left-Right,
Progressive-Populist coalition as I noted in my recent column, “Senator Rand Paul Is Right To Hold Up Janet Yellen’s Federal Reserve Nomination, And Democrats Should Support Him.”
However, even though the Tea Party and Occupy Wall Street advance
authentic points of grievance with the Fed, because so much of today’s
‘grassroots activism’ sells out to partisan affiliation, the Left and Right are controlled more by their reactions to one another than across-the-aisle points of agreement. An understanding of why the country is so divided would require the reading of an excellent 400-plus page book – Avi Tuschman’s Our Political Nature: The Evolutionary Origins of What Divides Us, which of course most Americans aren’t going to do. My humble contribution is an in-depth interview with him about the ideological partisan divide .

So, Afro-Optimism contrasts with American-Pessimism and the continued U.S. anti-China angst and unbridled military operations in Africa only contribute to a deeper China-Africa embrace that will impact dollar hegemony.

So how will it all happen?
I believe by this decade’s end we’ll see a gold-backed currency in
Africa in one of three ways- through a common market optimal currency
area; a series of regional parallel currency regimes which will lead to
single currency; or through a local gold-backed currency which becomes
so attractive in a multi-currency environment that it compels regional
and continental embrace.

As I advised the African Union in 2008, Africa is definitely an
optimal currency area as defined by Nobel Prize Economist Robert Mundell
– it has the necessary GDP, currency reserves, and improving labor and
capital mobility to be sturdy enough to survive speculative attack and
the ebb and flow of demographic changes.

But 53-African nations agreeing on a common market with a single
currency has been a challenge with nothing concrete established since
the 1991 Abuja Treaty which intended it all. And regional monetary
unions like the West African Monetary Zone (WAMZ) – the one with the
most potential – have languished, continually postponing currency
issuance.

So, it now seems far more likely that the process will be bottom-up
with the central bank of a single African nation issuing a 100%
gold-backed currency that would not initially replace any other currency as legal tender.

By allowing the electorate to freely choose to use the new currency
in a multi-currency environment, good money would likely win over bad
and over time a young gold medium of exchange would become the ‘people’s
money.’ Seeing its success, neighboring governments would throw in
enough reserves to make it a credible regional currency.

Where does China fit into this?
It could either provide aid in the form of gold bullion or give an
implicit indication of its support to African nations who take this
route or it could make millions and billions in yuan-denominated loans to African entrepreneurs in a gold-based currency of its own.

Is this any more of a long-shot than seeing the dollar tied once again to gold?
I don’t think so.